Strong Consumer Demand Fuels Car Sales

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February 3, 2011 @ 12:37 pm
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Jeep Grand Cherokee fuels January auto sales rise for Chrysler Group.

Despite wintry weather across much of the nation, U.S. consumers were in a car-buying mood last month, helping to boost most automakers’ January sales by double-digit percentages compared to a year ago, Daily Finance reported.

Among the first to report were the nation’s two largest automakers, General Motors (GM) and Ford Motor, which said improved demand was driven largely by an increase in retail sales, as consumers put aside concern about the U.S. economy and rising gas prices. GM said its retail sales rose 36%, while Ford reported a retail sales gain of 27%.

Overall sales, including those to fleet customers such as rental-car agencies, rose 21.8% at GM. Among its four core brands — Buick, Cadillac, GMC and Chevrolet, Detroit-based GM said total sales rose 23%. Ford registered a 13.3% rise in overall sales.

Banner Year Ahead?

Chrysler Group, the smallest of the Detroit Three, said its overall sales rose 23% to 70,118 on strong demand for Jeep-brand vehicles, and other trucks and sport-utility vehicles. Chrysler, which just completed an ambitious program to overhaul 75% of its lineup, said Jeep sales rose 47% in January, led by a more than two-fold increase in sales of the recently redesigned 2011 Jeep Grand Cherokee SUV.

Dodge and Ram divisions also saw sales increase, averaging 20% between them, but demand at the Auburn Hills, Mich.-based company’s namesake Chrysler division slipped 9%. Many of the division’s new offerings, including the 200 and 300 sedans, have only recently begun to hit dealers’ lots after undergoing extensive revamping.

The new models and improved sales are the start of what Chrysler hopes will be a banner year for the company, less than two years after it exited bankruptcy. “We have started the year on a strong note,” Fred Diaz, lead executive for U.S. sales at Chrysler, said in a statement. “And we intend to continue gaining sales momentum as our new 2011 models hit dealer showrooms during this first quarter.”

“Tremendous Amount of Momentum”

Analysts estimate that sales of vehicles in the U.S. in January reached the second-fastest pace in 17 months, according to a consensus estimate of six analysts, Bloomberg News reported. Sales likely reached an annual rate of 12.4 million last month, after adjusting for seasonal variations. That compares to an annual sales rate of 11.6 million last year.

That’s good news for GM, which appears to be on a roll following its initial public offering of stock last November. New products are pulling consumers into GM showrooms, Rebecca Lindland, an analyst with IHS Automotive, told Bloomberg News. “They have a tremendous amount of momentum.”

Ford, however, disappointed Wall Street, missing sales forecasts of about 134,000 cars and trucks, according to Jesse Toprak, senior analyst at TrueCar.com.

In an interview, Toprak says Ford will struggle to beat year-over-year sales comparison in the coming months because it had much of the sales momentum in 2010, as GM and Chrysler struggled to regain their footing after exiting bankruptcy and Toyota Motor (TM) dealt with a string of safety recalls.

Among Asian manufacturers, Nissan Motors (NSANY), which recently eclipsed Honda Motor (HMC) as Japan’s No. 2 automaker, reported its U.S. sales rose nearly 15% to 71,847 vehicles. Sales at the company’s Nissan division gained 15.4% for the month, while those at its luxury Infiniti unit picked up 10.3% from a year ago.

Toyota, which recently surrendered its title as the nation’s No. 2 supplier of automobiles because of its recall woes, reported its sales rose 17.3%, compared to a year ago, marking the first month-to-month sales increase it has seen since September. In total, the beleaguered company sold 115,856 units in January.

“We are encouraged by last month’s results, which show continued strength in both the passenger and light truck segments,” said Bob Carter, a vice president at the company’s U.S. sales unit. Sales of Toyota brand cars and trucks rose nearly 24%, led increased demand for compact Corolla and midsize Camry sedans, along with several sport-utility models, the company said. Demand for luxury Lexus models, however, sank 17.1%.

Honda, the U.S.’s No. 4 automaker, said its sales increased 13%, largely on strong demand for the Fit subcompact, Odyssey minivan and several SUV and truck models. Demand for the popular Accord line of passenger cars, however, slipped 28%. In total, Honda sold 76,269 vehicles last month.

Shortages at VW

Subaru, the niche maker of all-wheel-drive vehicles, saw its sales rise 20.8% in January above last year’s levels. Subaru, which set a sales record in the U.S. last year, said it is “well placed” to set another record in 2011. Mazda Motor said its U.S. sales fell 9.1%, mainly attributable to “substantial reduction in fleet sales this month.”

South Korean automakers Hyundai Motor and Kia Motors continued to make inroads into the U.S. market last month, after setting sales records last year. January sales at Hyundai rose 22%, while those at Kia climbed 25.6%

German automaker Mercedes-Benz reported sales of passenger cars and light trucks, including Sprinter delivery vans and Smart commuter cars, rose 14% to 17,631 units, while January sales at Volkswagen (VLKAY) climbed just 2%, which the company attributed to “some product shortages on key models.”

VW announced Monday that the new U.S.-built Passat midsize sedan would begin rolling off the company’s newly built assembly line in Chattanooga, Tenn., in March and go on sale sometime after June.

Overall, consumers paid less for their vehicles last month, compared to a year ago. The average transaction price fell $162, or 0.5%, compared to January 2010, according to TrueCar.com. The decline was led by increased demand for small cars and compact SUVs, which are less expensive.